>> a school yard brawl over the federal debt. tea party power launches a 2012 candidate and game over at the supreme court. i'm pete williams in for gwen ifill tonight on "washington week." time is running out to get a deal on the debt and deficit here at home. >> by august 2 we run out of tools to make sure that all our bills are paid. so that is a hard deadline. at a certain point they need to do their job. >> but republicans are pushing back hard. >> instead of going to phil tonight and raising money, why didn't he call senator mcconnell, speaker boehner, minority leader pelosi? and majority leader reid into his office and sit down and do his job? >> a game of chicken or a

principaled standoff and where will it lead? while in greece protests over drastic measures to keep that country solvent. is there a ripple effect for the global economy? the republicans have a new candidate for president. >> together we can make a better america if we stick together. together we can bring the promise of the future. >> account tea party favorite run toe to toe with the other contenders? and the roberts court concludes its term with a major first amendment ruling. we wrap up the session, the first for the court's newest justice. covering the week, major garrett of national "journal." david wessel of the "wall street journal." >> award winning reporting and analysis, covering history as it happens. from our nation's capital, this is "washington week" with gwen

ifill. produced in association with national journal. corporate funding for "washington week" is provided by -- >> we know why we're here. >> to give our war fighters every advantage. >> to deliver technologies that anticipate the future today. >> and help protect america everywhere, from the battle space to cyberspace. >> around the globe, the people of boeing are working together, to give our best for america's best. >> that's why we're here. >> corporate funding is also provided by prudential financial, additional funding for "washington week" is provided by the annenberg foundation. the corporation for public broadcasting. and by contributions to your pbs station from viewers like you. thank you.

here again from washington, substituting for gwen ifill, pete williams of nbc news. >> good evening. you know it's serious when congress foregoes one of its most cherished traditions, leaving town around the holiday. senate majority leader harry reid delivered the solemn news to his colleagues that they'll have to cancel their post fourth of july plans and come back to washington next week, to work on trying to find some way to raise the amount of the federal debt. that decision came after the president scolded congress for putting off the tough decision. >> malia and shasha -- sasha generally finish their homework a day ahead of time. malia's 13, sasha's 10. it is impressive. they don't wait until the night before, they're not pulling all-nighters. [laughter] they're 13 and 10. you know, congress can do the

same thing. if you know you've got to do something, just do it. >> but republicans in congress did not sound very contrite. >> he should be ashamed. i respect the office of president of the united states but i think the president has diminished that office and himself by giving the kind of campaign speeches that he gave yesterday. >> mr. president, where's your plan that's going to reduce spending, that's going to have us live within our means? >> so, major, did the president's tough talk really help things along? >> there's a short answer to that. no. and it's very simple to understand why the president did what he did. he wasn't attempting to bring the sides together. he was attempting to move the needle. by that i mean the needle of public opinion. the president knows in the internal conversations and negotiations he's moved a great distance toward republicans, remember, he didn't even want

the debt increase matter tied directly to deficit reduction. he lost that argument weeks and weeks ago. now there's about $2 trillion of spending cuts on the table that the administration has at least in theory agreed to over the next 10 years. that's an enormous concession. there's about $400 billion in tax revenues on the table that republicans will not accept and when they told the president, not only will we not accept that, we won't talk about it any longer, the president felt the need to change the dynamic, to sort of raddle their cage and see if he could move the public more toward the white house position that he's dealing with an intransigent republican majority, at least in the house, and a significant enough republican minority in the senate to block anything from happening. and republicans of course responded in kind, you're insulting us, mr. president, sort of the school yard equivalent of saying, you throw like a girl. while republicans don't like to hear that. and it is worth pointing out that when these negotiations with vice president biden started, that was designed so

congress would not act independently, that republicans in the house wouldn't draft their own proposals, which the white house knew they could never accept. so when the president says, congress isn't doing its job, one of the reasons is the president invited them into these negotiations in the first part. so, it's disingenuous at that level. if you go back through all the history of this, but for right now as we approach this deadline, the white house wants to try to move the public opinion more in its direction. >> how dire is it? is there a clear path here toward some kind of an agreement? >> if there is i don't see it. i see both sides and i wrote a "national journal daily" on monday that both sides were digging in and the divisions were getting more pronounced, not less pronounced. little did i know how exactly that was going to play out this week but we couldn't have greater distance put between these two sides more rapidly than we saw this week. >> did the president succeed in moving the need snl >> we'll find out by midweek next week. i don't think he's persuaded any republican and i believe he's made a deal more difficult, not easier. >> so if there is no agreement, i mean, what are the stakes

here? help us understand what will happen. >> the federal government takes in less money than it spends every day. on august 3 it will take in about $12 million and it will spend $322 -- $32 million. it can't do that unless it can borrow the difference. i agree with major that it looks -- things look pretty bleak now. i find it very hard to believe that they're actually going to not raise the debt ceiling, even if it's just a temporary one but there is a bit of a problem here. that the leadership in the republican side saying two things, i think at the same time. one is they say we're going to lift the debt ceiling, america pays its debts, and the second thing they're saying is we don't believe the administration. we think this is -- as speaker boehner said, an artificial date. >> what is that date? >> because the government has to borrow to pay its bills, if it can't borrow, it will have some money coming in, it can

pay some bills. everybody seems to agree they should pay the interest on the debt. but they won't have enough money to pay everything else. so the treasury would have to decide, do we send social security checks or paychecks? do we give tax returns or send farm subsidies? do we pay the light bill or the gas bill? and they've never had to do this before because every time in the past has come down to the buyer -- has come down to the wire and they always raise it. the republicans have suggested that it's not so hard and the administration has said it is hard, it would be a disaster. and in fact a lot of former republican treasury officials and budget officials are pretty close to the administration on this one. >> how dire is this? we just saw the foot and from what's happening in greece, are we headed toward being another greece? this all could have so many international repercussions. >> right. i think it would be a big deal if the u.s. government couldn't pay its debts but i don't think that's where we're going to end up. we're not greece. greece is a small economy, greece is way, way deeper in hot than we are.

people have lots of options where to put money and greece is low on their list because they think there's going to be a default. where the greece metaphor comes in is that greece and portugal and spain and ireland have raised questions about whether governments keep their promises. and to the extent that the congress and the president can agree on a long run fiscal plan, it raises the question of, are we ever going to get our act together so that we don't become greece? >> and is the market yet or do you suspect it will either price this in or panic? >> it's been amazing how calm the markets have been and i think there are two reasons for that. one is, they kind of assume that eventually washington will do what it has to do. and secondly, greece and europe have been such a preoccupation that nobody wants to have money there, so they've moved money to the u.s. as europe has done its every six-month span date, now markets are beginning to focus on washington and it's not looking so good and you can see treasury yields start to happen. if the markets really believed

that they weren't going to raise the debt ceiling, you would see a big move this tanned would not be pretty. >> as these conversation goes forward, are we essentially looking at the president and speaker boehner here sort of a facing off on this or who are the coalitions of people, who can maybe breach this gap if at all? >> the speaker has said there aren't the votes in the house to pass any tax increases. the reality is, what could pass the house can't pass the senate because it can't get 60 votes there because not enough democrats will support something that has no tax increases or tax increases that are so small they're acceptable to get through the house. those are the two coalitions. the house and the senate. within that house, republican coalition -- within that house republican coalition, you have to look at the 1987 freshmen class and the tea party. they saw the shutdown as a washington compromise that was less than met the eye. they gave speaker boehner and president obama a chance to cut the deal, they looked at the deal and said, we got burned, we got much less out of it than we thought. this time they're going to be

much more reluctant to follow the president, certainly, and even follow their speaker. >> isn't it -- doesn't it put the republican leadership in this an awkward position, they can't deliver their members, that means they'll need more democrats to pass it, that gives the democrats more leverage to move the whole package to the left. >> if you want to do it. there are many republicans who want to make in the moment, the moment where everything comes to a head and people blink and decide to do something completely out of character and they want the democrats to make that move, not them. >> i was wondering about timing. because it seemed like the negotiations were going along. there were proposals for trillions in cuts. what was it that they were almost being too successful and that got -- >> no. from the white house and democrats' pesper -- perspective, they'd moved such a considerable distance, $2 trillion over four years, the republicans want $4 trillion, so you're halfway there with nothing on the revenue side. zero. and when republicans said -- when the democrats said, we have $2 trillion, where's your

tax increases, they said zero. zero is our number. zero. and democrats said, well, we can't live with that. >> speaking of critical players in all this, in the middle of all this back and forth, the treasury secretary, tim geithner, made it quite clear that he's thinking about leaving. what affect is that having? >> i guess it's not much fun to be the treasury secretary. i think it will have some effect. he's made himself a lame duck and lame ducks usually have less clout in these negotiations. it won't effect the big things but the margin makes it harder for them to get a deal and it undermines his ability to make commitments to republican and democrats. >> although it might be -- >> i don't think it was delivered on his part. i think he's told the president he wants to go, it leaked out, they had no choice but to confirm it and i think they all generally thought that this thing would be settled by now. >> it might be a sweetener, though. there was some talk this week about the fact that this deadline doesn't really count.

that if the government wanted to, even without authority from congress, it can still pay the debts. is that a factor here or does everybody agree that no one's going to try to walk that tight rope? >> you hear some members of congress say that but i think it's without content and i don't think they really believe that. i think if push comes to shove they may do six-week extension of the debt or six-hour extension of the debt ceiling so avoid finding out just what it would be like to avoid -- to do it. >> and you mentioned how relaxed the markets seem about this. do they realize it will come right down to the last minute, the way congress does everything else? are they prepared for that? >> i don't think they're prepared for congress not to do it. as we get closer to the deadline you'll see more and more talk from wall street about what if they don't do it and you'll start to see yields creaming up and that will put pressure on -- creeping up and that will put pressure on congress. >> thank you both very much. the political week actually began with michele bachmann, a third term member of congress from minnesota, going to her

hometown, waterloo, iowa, no coincidence there, to launch her campaign for president. >> government thinks it knows better how to spend our money. government thinks they know better how to make a better life for us. they think they create jobs. they even think they can make us healthier. but that's not the case. we have to recapture the founders' vision of a constitutionally conservative government if we are to secure the promise for the future. >> fueled by tea party power, she immediately shot to second place in the latest polls from both iowa and new hampshire. how did she do that? >> i think the biggest reason is she does not have a former in front of her. the other candidates are former governors. or -- so she's an of the moment politician. she has had her rise during this very interesting time in the republican party, she became of age, at least of national prominence, last year during the midterm elections, was the best fundraiser of any republican member of the house.

so now in the early part of the year she wanted to be in the leadership in congress. the new republican majority, speaker boehner and others said, no way, it's not your turn for this. so she decided to do the other thing. i'm going to run for president where there are no rules at all. anyone can run for president. so that's what she's doing. and she is really finding that there is a lot of enthuse yass much out there for her, -- enthusiasm out there for her message, of a smaller government, of fighting obamacare, as she calls it, etc. but we're not sure how this is going to end. she gives a good speech, she's a very good communicator but there are already experience questions being asked of her. some governors are saying, hold on just a minute. former governors and current governors make much better presidents. exhibit a, at least in republicans, is the current president. who was a senator, only a short time ago. she's the candidate of the summer time. i think we'll find out if she has the staying power but without a doubt she is getting crowds and generating tons of enthusiasm.

>> you mentioned her fundraising, she raised $13.5 million when she ran for the house. does that translate, can she use that same kind of experience to raise that kind of money for presidential campaign? >> she'll try. and she raised a lot of that through small donations, really all across the country. not because of who michele bachmann is but because she became the person who would stop nancy pelosi in her tracks. that was her message over and over. so it will perhaps have the same effect on she'll stop president obama but people have to begin to see her as the president, not just as a road block here. >> when she toyed with the idea of running for house leadership position, it was made very clear to me that if she ran, she got about 15 votes. she's not well regarded among her house republican colleagues. one of the reasons i was told is that she raised a lot of money, gave almost none to republicans running for open house seats in the competitive 2010 cycle. so inside people who work alongside her, they don't think of a -- a lot of her. are these going to be impediments or can she ignore -- whatever her washington

experience has -- ignore whatever her washington experience has been and reach into iowa and new hampshire and be a problem? >> she can ignore it for now but if this becomes -- if this looks like it's going to be a serious proposition, if she looks like the nominating contest, if she's still in this position, look for the republican establishment to start pushing up against her fairly hard. but for the moment she is a problem for some candidates. probably not m.i.t. romney, though. he is just fine with this -- mitt romney, though. he is just fine with this whole conversation going on about michele bachmann because people aren't talking about him and he's fine with that. he's trying to stay under the radar. he's trying to look beyond the republican primary. he was in pennsylvania this week the same time that president obama was. so it's not a problem father him but it's absolutely a problem for other republicans in the field. because she's taking up the oxygen. >> in terms of the politics, we know what she's been like in the house and we know her relationships with other members, both republican and democratic, but on the substance, she's been a member of congress for a while.

has she -- is she known for anything in terms of what she's doing legislatively? >> she's not. her legislative record is very short. she's covered the hill and she very seldom would come up in a debate. but she is a member of the house intelligence committee, she is involved in some things. but that's not what her candidacy is about. it's about tapng into the anger out there. but at some point when it comes time to pick a president, we'll see how she develops as a candidate. but -- so we don't yet know if she's the howard dean of the republican party or if she's a serious contender. we'll find out. >> would you compare her to sara pail snn >> one respect she looks like her. that's the only obvious comparison. beyond that she constantly tries to introduce herself as someone who a different than sarah palin. she calls herself scholarly. she has a law degree.

she practiced law. so she is different in that respect. but they're definitely tapping into the same type of frustration levels out there. but she's doing it more from the inside. she's an of the moment politician who is fighting from the inside. sarah palin was more fighting from the outside. but what she has done is taken up that space in this republican field. sarah palin was in iowa briefly, not nearly as much attention as michele bachmann. >> one other question about fundraising, how are the other candidates doing? >> mitt romney is going to raise $20 million this quarter. it's still much better than everyone else. the others are struggling to raise even almost 1/4 as much money. >> thank you. from the mortal combat of presidential poth politics to mortal combat. in the u.s. supreme court struck down a california law which would make it illegal or sell violent video games to minors. now that this term is over, is

this a decidedly probusiness court? >> it is on the cases that matter. business doesn't win across the board, but i'll just name three big cases that they cared about. two of them had to do with class action lawsuits and how easy it is to get a grievance to court. we saw the court reject a huge claim against wal-mart, the nation's largest private employer, and said that if women or minorities want to band together to sue a big company, they have to point to a specific policy of discrimination, can't just go, you know, and look regionally. it was -- so that was important. they also said that in terms of a class action lawsuit against at&t mobility over a grievance arising from the fine print in a cell phone contract, couldn't go because the arbitration clause trumped a state law that might have protected someone who complained about their cell phone contract. and finally you think of generic drugs which 75% of us now take generic prescriptions over brand name. the court rejected a lawsuit

that would have allowed a case against a company over a failure to warn about the drug. so, yes, probusiness. >> i want to ask you about the newest justice of the term, kagen, her first term. she's never been a judge before. how did she do? >> she did amazingly well. this is a woman who came on the court, the first person in 40 years who had never worn the black robe. she figured out a way to write very strong opinions, whether in dissent or in the majority, and also in terms of the give an take among justices -- and take among justices, as we talked before on this show, it can be a very hot bench with justices constantly interpreting each other. she -- interrupting each other. she figured out a way to ease herself into the conversation and make effective points, so effective that chief justice ronts has talked publicly about it and other justices have expressed to me real admiration for what she has done in her first term. >> how about justice ginsburg? she's now the leader of the

liberals, she has some health problems. >> i talked to her this week in an interview and she has ascended to a new role there. now with justice stevens having retired. ginsburg is the most senior member of the left. so she now assigns the dissenting opinioning when the conservative majority might take over, for example, in business cases. and she's feeling very emboldinned in this role. she said that she now thinks much more about what kind of dissenting statement the court might need to file relative to either a business or criminal law cases and she's feeling actually quite healthy. she survived two serious bouts with cancer in recent years, she's 78 years old. she's 78. she said that she stays healthy with a personal trainer and she hopes she stays for at least four more years. >> if her health is good, what about the health care ruling? [laughter] you've been traveling around the country as this case has been moving its way up, will that come next term and what

are the early pros peblingts? >> i think for -- prospects? >> i think for sure it's going to come next term. we've seen the first ruling on the federal health care law mandate that everybody have insurance by 2014. and that court based in cincinnati ruled for the obama administration. i think we will probably see a case up at the court by either late fall, early spring, with a ruling coming right in the middle of the election season. >> let me be parochial here, first amendment concerns matter to all of us and i grew up in california, not known as a reactionary state, but california did have this law about video games. does this decision strike new ground on first amendment protections or does it just establish the ones we always had, just in the video game rel snm >> it if -- if it had gone the opposite way, it would have carved out a new exception. that way it would have been ground breaking. basically what justice scalia wrote is, we're not going to have an exception for violent materials. we've never had an exception for violent materials for children. we've read them the grimm

fairytales and they're violent and we think that's ok. that's what california was arguing for saying these video games inspire violence. and they can be dangerous to children. and the court rejected that idea saying, studies really don't show that. and while the court has in the past carved out an exception for sexually explicit materials, that you can't sell so-called girly magazines to minors, you can sell them plenty of violent stuff where bodies are torn apart. >> in your conversation with justice ginsburg, what did she say it was like to have a court this year with the first time three women on the bench? sn >> she said it was distinctly different. they sit by seniority. so all the women aren't clumped together. they're mixed in with the six other men. she said, you know, it looked like we're here to stay because it looks like we're really allowed up there. when you walk in it doesn't look so male anymore. like this, kind of. >> but did she say a change in the way that cases came out? >> no. because, well, first of all, all three women happen to be on

the liberal side. and their two predecessors for the new justices were both liberals. so it wouldn't have changed, it might have changed in one or two that she mentioned, but not overall. >> and when we say she's 78, she's only the oldest justice by three years. >> scalia is 75. kennedy is about to turn 75 this month. and 75 in court years is not really that old. >> thank you all very much. that will have to do it for tonight. gwen will be back next week. be sure to check out our "washington week" summer reading list. suggestions from our very learned panelists on what they're reading. you can find that and more at pbs.org. i'm pete williams, enjoy your fourth of july holiday weekend. good night. >> funding for "washington week" is provided by --

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